Wednesday 5 October 2022

BAC layoffs 373, closing 11 branches and 79,789 credit card accounts

The private bank said the measures are taken due to the blow they receive due to the new interest rate caps for financial operations, the "usury" law that was recently adopted by Costa Rica

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05 October 2022 - At The Banks - BCCR

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(QCOSTARICA) BAC Credomatic announced this Thursday, July 2, the layoff of 373 employees, the closing of 11 branches or points of service and will cancel 187,526 credit cards to 79,789 customers.

The bank reported that the measures are taken due to the blow they receive due to the new interest rate caps for financial, commercial, and microcredit operations provided in Law 7472 on Promotion of Competition and Effective Consumer Defense – known as the usury law; and the low current and projected growth for 2020.

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Read more: How does the new usury law change credit in Costa Rica?

“We face and adapt to changes seeking to preserve the trust we have built and ensuring the healthy sustainability of the organization in the new context,” explained Federico Odio, general manager of BAC Credomatic, a private bank.

Hate added that the decisions announced today are difficult for the financial institution, but “necessary and responsible”.

The bank’s results have been affected amid the blow caused by the pandemic to the Costa Rican economy and the financial segments in particular.

The operating profit (which excludes the exchange rate devaluation) decreased 8% in May, compared to the previous year, due to the economic situation known to all, explained Laura Moreno, vice president of Corporate Relations at BAC Credomatic.

It is possible that this situation affects this result for a few more months, taking into account the impact of the pandemic and its evolution in the face of the new normal, Moreno added.

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The bank will communicate with each of the clients and give a transition period of 60 days to finalize the closing – pay off – the credit cards.

The balances that the clients have pending to pay will be collected as of September 3, 2020. BAC will grant a term of up to five years to pay.

The clients to whom the cards will be closed belong to segments that the bank cannot continue serving with traditional products and channels, the press release detailed.

The entity did not detail which are those particular segments to which the financing conditions must change.

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BAC is evaluating which new credit and microcredit products it will offer to clients who will lose their financing option with the plastics that the entity will close.

The bank also announced that the new caps will affect benefits for other cardholders, such as loyalty programs, promotions, points and facilities offered depending on the type of card and profile.

BAC

BAC Credomatic is a financial group in Central America, with operations in Guatemala, El Salvador, Honduras, Nicaragua (where it was founded and former headquarters in the city of Managua), Costa Rica (current headquarters), Panama, Grand Cayman, The Bahamas, and Florida.

Founded in 1952 in Managua as Banco de América Central, BAC was the forerunner of what is now known as the BAC Credomatic Group.

In the mid-eighties, the Group decided to enter other markets in the region, starting in Costa Rica with the acquisition of what is now known as Banco BAC San José.

In December 2010, Grupo Aval, a Colombian holding company engaged in a wide variety of financial activities, including banking, telecommunications, and real estate; in Colombia and Central America, completed the purchase of the BAC Credomatic banking group.

In 2017 the group started to use BAC Credomatic as a brand for all their bank and credit card services, using a new modern logo.

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